ICSID’s Reinforcement?: UNASUR and the Rise of a Hybrid Regime for International Investment Arbitration

The legitimacy and effectiveness of the International Centre for Settlement of Investment Disputes (“ICSID”) is a matter of spirited debate. Opponents argue that ICSID’s ideological and procedural bias impedes fairness, its complexity and cost restrict access to justice, and its lack of an appeal process exacerbates uncertainty and unpredictability. Dissatisfaction with and ideological critique of ICSID, especially on the part of Latin American states, culminated in 2009 when Ecuador proposed the creation of a regional arbitration centre as part of the Union of South American Nations (“UNASUR”). This article surveys the myriad criticisms launched against ICSID and assesses the likelihood and desirability of the UNASUR Arbitration Centre as an alternative or supplement to ICSID. The article concludes that reforms to ICSID can address most of the problems identified by critics but that the UNASUR Arbitration Centre will continue to gain momentum. The result will be a hybrid international investment law regime, at least in the short- to medium-term. This hybrid regime will be functional, serve an important purpose for Latin American countries, and advance the goals of investment liberalization